Highlights
Coverage was solid for Monday's weekly T-bill auctions, at 3.10 for the 3-month the highest in 5 weeks and the highest in 3 weeks for the 6-month at 3.16. Demand from end investors was also strong, with non-dealers taking down 52 percent of the $48 billion 3-month offering, their largest share since April 16, while the non-dealer takedown for the $42 billion offered in the 6-month was 54 percent, the largest since March 19. Rates continued their upward climb in anticipation of further hikes in the Fed funds rate, rising 0.5 basis points from the prior week to 1.895 percent for the 3-month and 4.5 basis points to 2.080 percent for the 6-month.

Definition
Treasury bills are sold at public auctions every week. The 3-month bill is also known as the 13-week bill. Competitive bids at these auctions determine the interest rate paid on each issue. A group of securities dealers, known as primary dealers, are authorized and obligated to submit competitive tenders at Treasury auctions. Dealers can hold the bills, resell the bills to their clients or trade them with other securities firms. Typically, the New York Fed approves about 20 securities firms to be primary dealers but that number dropped sharply during the 2008 financial crisis as some were merged into other firms or went bankrupt. The Fed has been rebuilding that number regularly and the latest list can be found here. Since these are public auctions, the Treasury must announce the size, date and time of the auction every week. Three-month bills are announced on Thursday for auction the following Monday and are issued (settled) on Thursday. If a Monday is a banking holiday, the bills are auctioned on Tuesday. (Department of the Treasury)
Why Investors Care

Data Source: Haver Analytics

The 3-month bill rate is usually
similar to the federal funds rate
target; often when investors
expect a rising rate environment,
it is higher than the funds rate,
but when they expect rates to
decline, it will be lower than
the funds rate target. The 3-
month bill rate depicted in this
chart represents the high
discount rate from the Treasury's
weekly auction on Mondays. It
only represents one moment in
time, and is not an average of
daily numbers. The dates on the
chart and the grid are the
auction dates of the security,
which are usually on Mondays.Data Source: Haver Analytics